Café de Colombia

1. Café de Colombia • Nick Kordesch • Christina Rosa • Jennifer Su • Rebecca Wang

2. DDB IntroductionCurrent Situation Decision in BriefCoffee Market    Trends    ExpectationsCafe de Colombia     Goals     Products     Problem AnalysisRecommendation     European Market     Strategic Alliances     Emotional AdsFinancial Analysis    European Market    U.S. MarketFuture ProspectsConclusion Current Situation • Oversupply of coffee caused prices to drop 35% • Need to increase sales volume while using a lower advertising budget

3. DDB IntroductionCurrent SituationDecision in BriefCoffee Market    Trends    ExpectationsCafe de Colombia     Goals     Products     Problem AnalysisRecommendation     European Market     Strategic Alliances     Emotional AdsFinancial Analysis    European Market    U.S. MarketFuture ProspectsConclusion Decision in Brief • $15 million advertising budget • Target European consumers • Form strategic alliances with well known restaurants • Use emotional ads to position Café de Colombia’s company and product quality

4. DDB IntroductionCurrent Situation Decision in BriefCoffee MarketTrends    ExpectationsCafe de Colombia     Goals     Products     Problem AnalysisRecommendation     European Market     Strategic Alliances     Emotional AdsFinancial Analysis    European Market    U.S. MarketFuture ProspectsConclusion Coffee Market Trends • Coffee is consumed 66% of the time in the morning • In the 1980s Pepsi Generation, coffee was losing popularity • Gourmet coffee consumption is increasing • Traditional coffee consumption is decreasing • Economy is in a downturn

5. DDB IntroductionCurrent Situation Decision in BriefCoffee Market    TrendsExpectationsCafe de Colombia     Goals     Products     Problem AnalysisRecommendation     European Market     Strategic Alliances     Emotional AdsFinancial Analysis    European Market    U.S. MarketFuture ProspectsConclusion Market Expectations • Younger people are expected to increase coffee consumption • gourmet coffee drinking becomes “hip” • 100% Colombian share in U.S. grocery segment is expected to increase

6. DDB Introduction Current Situation Decision in BriefCoffee Market    Trends    ExpectationsCafe de ColombiaGoals     Products     Problem AnalysisRecommendation     European Market     Strategic Alliances     Emotional AdsFinancial Analysis    European Market    U.S. MarketFuture ProspectsConclusion Goals To produce high quality coffee at a competitive price to consumers

7. DDB Introduction Current Situation Decision in BriefCoffee Market    Trends    ExpectationsCafe de Colombia     GoalsProducts     Problem AnalysisRecommendation     European Market     Strategic Alliances     Emotional AdsFinancial Analysis    European Market    U.S. MarketFuture ProspectsConclusion Products • Our Mild Washed Arabica Coffee is known for its low caffeine content and full bodied sharp taste • Each bean is handpicked to ensure only high quality coffee is sold

8. DDB Introduction Current Situation Decision in BriefCoffee Market    Trends    ExpectationsCafe de Colombia     GoalsProducts     Problem AnalysisRecommendation     European Market     Strategic Alliances     Emotional AdsFinancial Analysis    European Market    U.S. MarketFuture ProspectsConclusion 3 Intangible Assetswe’ve acquired over the years • Juan Valdez • 100% Café de Colombia Logo • Café de Colombia “Country of Origin • Descriptor”

9. DDB Introduction Current Situation Decision in BriefCoffee Market    Trends    ExpectationsCafe de Colombia     GoalsProducts     Problem AnalysisRecommendation     European Market     Strategic Alliances     Emotional AdsFinancial Analysis    European Market    U.S. MarketFuture ProspectsConclusion Brand Recognition • Best Coffee Producer Rating • 85% Logo Association • Juan Valdez awareness increases in USA

10. DDB Introduction Current Situation Decision in BriefCoffee Market    Trends    ExpectationsCafe de Colombia     GoalsProducts     Problem AnalysisRecommendation     European Market     Strategic Alliances     Emotional AdsFinancial Analysis    European Market    U.S. MarketFuture ProspectsConclusion Best Coffee Producer Rating

11. DDB Introduction Current Situation Decision in BriefCoffee Market    Trends    ExpectationsCafe de Colombia     GoalsProducts     Problem AnalysisRecommendation     European Market     Strategic Alliances     Emotional AdsFinancial Analysis    European Market    U.S. MarketFuture ProspectsConclusion Percentage of Logo Recognition

12. DDB Introduction Current Situation Decision in BriefCoffee Market    Trends    ExpectationsCafe de Colombia     GoalsProducts     Problem AnalysisRecommendation     European Market     Strategic Alliances     Emotional AdsFinancial Analysis    European Market    U.S. MarketFuture ProspectsConclusion Increase of Juan Valdez Awareness Increased 45% in 20 years

13. DDB Introduction Current Situation Decision in BriefCoffee Market    Trends    ExpectationsCafe de Colombia     Goals     ProductsProblem AnalysisRecommendation     European Market     Strategic Alliances     Emotional AdsFinancial Analysis    European Market    U.S. MarketFuture ProspectsConclusion Problem Analysis • International market prices dropped 35% from 1995-2000 • Global coffee prices are expected to be only $.80 per lb but it costs $.80 per lb to grow high quality coffee • Investment companies are beginning to support other countries

14. DDB Introduction Current Situation Decision in BriefCoffee Market    Trends    ExpectationsCafe de Colombia     Goals     Products     Problem AnalysisRecommendationEuropean Market     Strategic Alliances     Emotional AdsFinancial Analysis    European Market    U.S. MarketFuture ProspectsConclusion European Market Opportunity • Europe consumes 42% of world’s coffee • Europe coffee consumption makes up 40% of Columbia’s exports • Café de Colombia currently spends 17% of its advertising budget in Europe

15. DDB Introduction Current Situation Decision in BriefCoffee Market    Trends    ExpectationsCafe de Colombia     Goals     Products     Problem AnalysisRecommendationEuropean Market     Strategic Alliances     Emotional AdsFinancial Analysis    European Market    U.S. MarketFuture ProspectsConclusion Target European Consumers • Previous strategy: advertise to roasting companies (Push) • New strategy: Target end consumers (Pull) • Recommendation: Increase advertising budget to $9 Million (60% of budget)

16. DDB Introduction Current Situation Decision in BriefCoffee Market    Trends    ExpectationsCafe de Colombia     Goals     Products     Problem AnalysisRecommendationEuropean Market     Strategic Alliances     Emotional AdsFinancial Analysis    European Market    U.S. MarketFuture ProspectsConclusion Target European Consumers • Tactics: Train posters, signs in cafes, magazines advertising quality • We want consumers to look for the Colombian logo in cafes and link it with high quality

17. DDB Introduction Current Situation Decision in BriefCoffee Market    Trends    ExpectationsCafe de Colombia     Goals     Products     Problem AnalysisRecommendation     European MarketStrategic Alliances     Emotional AdsFinancial Analysis    European Market    U.S. MarketFuture ProspectsConclusion Strategic Alliances • Team up with a well known company to promote products for both parties

18. DDB Introduction Current Situation Decision in BriefCoffee Market    Trends    ExpectationsCafe de Colombia     Goals     Products     Problem AnalysisRecommendation     European MarketStrategic Alliances     Emotional AdsFinancial Analysis    European Market    U.S. MarketFuture ProspectsConclusion Strategic Alliances • High quality donuts teamed with high quality coffee • Incentive based contract between: Krispy Kreme, Folger’s, and Café de Colombia growers • Sell 100% Colombian Coffee with Krispy Kreme • Introduce seasonal recipes using Café de Colombia • Target Markets

19. DDB Introduction Current Situation Decision in BriefCoffee Market    Trends    ExpectationsCafe de Colombia     Goals     Products     Problem AnalysisRecommendation     European MarketStrategic Alliances     Emotional AdsFinancial Analysis    European Market    U.S. MarketFuture ProspectsConclusion Seasonal Recipes • 100% Iced Colombian Coffee • Coffee Velvet Drink

20. DDB Introduction Current Situation Decision in BriefCoffee Market    Trends    ExpectationsCafe de Colombia     Goals     Products     Problem AnalysisRecommendation     European MarketStrategic Alliances     Emotional AdsFinancial Analysis    European Market    U.S. MarketFuture ProspectsConclusion Target Markets • Young Adults: continuous growth of consumption of high quality coffee drinks by young female consumers • Traditional coffee consumers want high quality coffee

21. DDB Introduction Current Situation Decision in BriefCoffee Market    Trends    ExpectationsCafe de Colombia     Goals     Products     Problem AnalysisRecommendation     European Market     Strategic AlliancesEmotional AdsFinancial Analysis    European Market    U.S. MarketFuture ProspectsConclusion Emotional Advertising • Café de Colombia benefits from a better Colombia • Spend 6 Million on “Emotional Ads” • Pamphlets • Posters • Café de Colombia supports “Fair Trade”

22. DDB Introduction Current Situation Decision in BriefCoffee Market    Trends    ExpectationsCafe de Colombia     Goals     Products     Problem AnalysisRecommendation     European Market     Strategic AlliancesEmotional AdsFinancial Analysis    European Market    U.S. MarketFuture ProspectsConclusion Emotional Advertising

23. DDB Introduction Current Situation Decision in BriefCoffee Market    Trends    ExpectationsCafe de Colombia     Goals     Products     Problem AnalysisRecommendation     European Market     Strategic Alliances     Emotional AdsFinancial Analysis    European Market    U.S. MarketFuture ProspectsConclusion Global Market • Global Consumption = 105,932,000 bags • Colombia Production = 12,385,605 bags • Colombia’s Global Market Share = 11.69%

24. DDB Introduction Current Situation Decision in BriefCoffee Market    Trends    ExpectationsCafe de Colombia     Goals     Products     Problem AnalysisRecommendation     European Market     Strategic Alliances     Emotional AdsFinancial AnalysisEuropean Market    U.S. MarketFuture ProspectsConclusion European Market • 40% of Colombia’s total exports • Export Volume = 3,752,955 bags • Market Share = 8.507%

25. DDB Introduction Current Situation Decision in BriefCoffee Market    Trends    ExpectationsCafe de Colombia     Goals     Products     Problem AnalysisRecommendation     European Market     Strategic Alliances     Emotional AdsFinancial Analysis    European MarketU.S. MarketFuture ProspectsConclusion US Market • 60% of Colombia’s total exports • Volume = 5,629,433 bags • Market Share = 30.10%

26. DDB Introduction Current Situation Decision in BriefCoffee Market    Trends    ExpectationsCafe de Colombia     Goals     Products     Problem AnalysisRecommendation     European Market     Strategic Alliances     Emotional AdsFinancial Analysis    European Market    U.S. MarketFuture ProspectsConclusion Break-Even Analysis 0.9653 price-0.8000 cost-0.0965 sales cost (10%) 0.0688 unit contribution ($ per lb)

27. DDB Introduction Current Situation Decision in BriefCoffee Market    Trends    ExpectationsCafe de Colombia     Goals     Products     Problem AnalysisRecommendation     European Market     Strategic Alliances     Emotional AdsFinancial Analysis    European Market    U.S. MarketFuture ProspectsConclusion Break-Even Analysis Fixed Cost $15 M = Unit Contribution 0.0688 = 1,648,245 bags = 1.5% world market share

28. DDB Introduction Current Situation Decision in BriefCoffee Market    Trends    ExpectationsCafe de Colombia     Goals     Products     Problem AnalysisRecommendation     European Market     Strategic Alliances     Emotional AdsFinancial Analysis    European Market    U.S. MarketFuture ProspectsConclusion Expected Sales • From 1994 to 1995, we increased advertising by $2.47 mill in the US • US volume exports increased by 10.53%. • An increase of $9 mill in Europe will increase sales by 38.35% (assuming advertising in Europe is as effective as it is in the U.S.) • Europe market share will become 11.77%

29. DDB Introduction Current Situation Decision in BriefCoffee Market    Trends    ExpectationsCafe de Colombia     Goals     Products     Problem AnalysisRecommendation     European Market     Strategic Alliances     Emotional AdsFinancial Analysis    European Market    U.S. MarketFuture ProspectsConclusion Future Prospects • Pre-packaged coffee or pre-packaged mixes • Ready-to-drink bottled coffee • Develop the website www.JuanValdez.com • Improve internal road system to reduce production costs

30. DDB Introduction Current Situation Decision in BriefCoffee Market    Trends    ExpectationsCafe de Colombia     Goals     Products     Problem AnalysisRecommendation     European Market     Strategic Alliances     Emotional AdsFinancial Analysis    European Market    U.S. MarketFuture ProspectsConclusion Conclusion • Expanding into different age groups, cultural groups, and seasons based on current market trends • Leave open future opportunities